Logo

Calls to action for widespread adoption of electronic health records have come from a broad spectrum of the private and public sectors. The problem, to date, is not that information does not exist, as much as that the data have not been organized around the patient. An integrated Personal Health Record is a patient- or family-centered technology designed to capture not only the contacts with health care providers, but also personal information on insurance, diet, and personal preferences that a physician's health record will not capture. Medical banking, based on a new technology platform called the Integrated Health Card, is emerging as a solution to the problem of collecting and combining information from the electronic health record with personal health information. It may also be the only way for fledging health savings accounts to enable the price and quality transparency of the medical market that has been called for repeatedly in this decade. In analyzing the political and patient applications of widespread adoption of this new innovation, the positive contributions to social welfare are very likely to outweigh the negative.
More Articles of Interest

* Subprime Mortgages: America's Latest Boom and Bust
* American business and the new social regulation
* The response of small business owners to changes in monetary policy
* Economic and financial climate change: a business economist's perspective
* The Great Inflation and Its Aftermath: The Past and Future of American Affluence

Business Economics (2009) 44, 41-50.

doi:10.1057/be.2008.2

Keywords: health insurance, consumer information, information technology, consumer-driven health plans, health savings accounts

**********

Robust information technology (IT) is considered an essential component of a high-performance health care system that will deliver the best treatment to improve, restore, or sustain health for a fair cost. Calls to action for widespread adoption of electronic health records have come from a broad spectrum of supporters, ranging from the Institute of Medicine to the U.S. President. [Institute of Medicine 1999, 2001; Department of Health and Human Services 2004, 2006]. The problem is that the majority of the medical industry has not embraced IT to improve performance, as have other industries where success has been greater. These include financial services, retail, transportation, and manufacturing [Brynjolfsson and Hitt 2000]. With expenditures over two trillion dollars per year and an ever-increasing share of the gross domestic product, health care is a full-blown industry in its own right.

One of the key frustrations with IT investment in health care is the lack of connectivity between medical providers, patients, and payers. Specifically, the problem is not that IT investments have not been made [Burke, Wang, Wan, and Diana 2002] and that the data do not exist, as much as that the data have not been organized around the patient. In 2004, the Bush Administration made a commitment to accelerate the use of health IT to improve quality of care and lower costs. David Brailer [2005] proposed a strategic plan as health IT czar that would promote health IT interoperability between all key stakeholders. In particular, medical providers would be called upon to exchange medical data using a common set of standards. However, since 2004, interoperability has slowed because making health IT systems open and transparent has not brought about a shared sense of Pareto improvement among medical providers. Specifically, transparency initiatives are suspected of rewarding low-cost, high-quality providers and leaving others that have less affluent patients and/ or less profitability to suffer financially. Without a federal law that compels interoperability, the implementation of Dr. Brailer's vision has been lagging.

A new business model, "medical banking," has emerged that could change this situation for the better, from both a patient and provider perspective. Medical banking uses a new technology platform called the Integrated Health Card (IHC), which could provide a solution, scalable from existing technologies, to address the problem of collecting information from the electronic health record together with personal health information. It would also reduce transaction cost relating to the provision of health care. As it grows, medical banking will provide a powerful innovation to help deliver a high performance health care system.

In this paper, a vision for medical banking is stated. A patient vignette is used to illustrate how medical banking card technologies can be a viable platform for efficient utilization of personal health records (PHRs). And finally, a description of a set of factors is discussed to support the conclusion that some form of medical banking is highly likely but also quite disruptive to the status quo delivery system and to potential health reform initiatives.

1. Medical Banking Defined

The goal of medical banking is to enhance financial transactions associated with health care with information on the patient's condition, treatment outcome, and adherence to patients making their own human capital investments. If we consider Michael Grossman's [1972] landmark household production function specification, where medical care and other factors affect the production of health, medical banking explicitly makes it possible to collect the data necessary for a household production model to become a day-to-day reality and a part of the current financial transaction system in health care markets.